PRESS RELEASES

BREXIT: A ‘NO DEAL’ SCENARIO SHOULD NOT BE AN OPTION

Brussels, 15 October 2018 – The European spirits industry calls for the urgent resolution of the outstanding issues in the Brexit negotiations before the European Council Summit this week.

“The conclusion of the Withdrawal Agreement, including the vital transition period, is a top priority that should be achieved without any further delay” said Ulrich Adam, Director General of spiritsEUROPE. “The final version of the Withdrawal Agreement should include the reciprocal protection of Geographical Indications, agreed rules and processes to avoid a hard border on the island of Ireland, and secure continuity in commercial relations with third countries”, he added.

The disruption caused by the UK exiting the EU without a Withdrawal Agreement to the trade, customs and regulatory environment is likely to be extremely detrimental to the spirits sector. [1]

The final version of the Withdrawal Agreement should include a set of rules ensuring the reciprocal protection of Geographical Indications (GIs). European producers seek continued full protection of spirits GIs in the UK without further re-examination. GI-protection is a key pillar for the trade in high value-added spirits. They are a hallmark of tradition, cultural integrity and product quality and act as a key driver for export success in markets far beyond Europe. Mutual recognition and protection are therefore fundamental for producers and consumers on both sides of the Channel.

The Withdrawal Agreement should also secure rules and processes to avoid a hard border on the island of Ireland, whilst limiting barriers to the functioning of the UK’s internal market. Among European spirits, Irish spirits stand out for their stellar growth in exports in recent years, a growth that has been built on a seamlessly integrated all-island supply chain and underpinned by the three famous GIs: Irish Whiskey; Irish Cream; and Poitin.

The final version of the Withdrawal Agreement should secure continuity in commercial relations with third countries. While we appreciate that neither the UK Government nor the European Commission can unilaterally secure the continued benefits of the EU’s preferential trade agreements with third countries for the UK post-Brexit. We emphasise that a transition period is necessary to allow for negotiation with third countries over the continuation of these agreements. We also call on the EU’s third country partners to consider the value of good faith in commercial relationships.

“Looking ahead to the future relationship, we call for the political declaration accompanying the Withdrawal Agreement to mandate the negotiators to achieve a deep and comprehensive EU-UK trade agreement securing tariff-free trade, fair competition and maintaining consumer confidence” concluded Ulrich Adam. [2]

A cliff-edge scenario would impact shipping procedures between the UK and the EU-27. UK producers may no longer be able to access the EU Excise Movement and Control System (EMCS). Customs clearances and export-import declarations may be required for UK-EU movements and vice versa, which would cause a sudden increase in administrative procedures which would in turn cause delays at borders, disrupt delivery and product journey times.

While tariffs are not expected on finished spirits products between the EU and the UK, under the EU’s WTO commitments, small tariffs could come into effect on imported inputs sourced from the EU, including barley, glass and closures. Depending on the UK’s future trade policy, there could also be tariffs on EU imports from the UK without a deal. This would increase production costs for spirits producers.

In addition, the sector currently benefits from import tariff reductions secured through EU FTAs, without a transition period, the UK would no longer be party to these FTAs as of 30 March 2019 and higher tariffs may be payable upon import. This would add cost across the EU spirits sector and should be avoided.

[2] Looking ahead to the future relationship:

In the context of discussion surrounding a political declaration on the future EU-UK relationship, the spirits sector asks for trade between the EU27 and the UK to be as seamless as possible, especially on the island of Ireland. We stress the need once again for predictable and robust customs procedures to be put in place with a phased introduction if there are any new arrangements.

We also call for the EU and UK to jointly maintain, defend and protect GIs and their use in trade agreements to ensure product quality and promote the commercial interests of rural communities. We also need to ensure seamless VAT and Excise procedures between the EU and the UK, particularly with a view to protecting integrated all-Ireland supply chains.

We call for zero tariffs for finished goods and raw material inputs, including dry goods, glass bottles etc, that are supported by integrated and aligned customs protocols and regulatory cooperation/stability on alcohol products.